Gold Price Futures (GC) Technical Analysis – Tentative Buying after Fed Member Rate Hike Warnings

Gold futures inched higher on Monday in a tentative trade as investors eyed firm U.S. Treasury yields and a steady U.S. Dollar throughout the session. Influencing the trade were comments from Fed officials indicating the central bank was not softening its fight against inflation despite last week’s tepid U.S. consumer inflation report.

At 22:00 GMT, December Comex gold futures are trading $1774.80, up $5.40 or +0.31%. The SPDR Gold Shares ETF (GLD) is at $164.94, up $0.38 or +0.23%.

Fed to Keep Raising Rates

Fed Vice Chair Lael Brainard on Monday joined Governor Christopher Waller, to indicate the Fed is ready to begin moving in smaller rate hike increments, while still emphasizing what Brainard called the central bank’s “resolve” to keep pushing rates higher as needed to battle a surge in inflation.

Despite the Fed member warnings about higher rates, Fed funds futures traders see an 89% probability of a 50 basis point increase at the central bank’s December meeting, with only an 11% likelihood of a 75 basis point rise.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the nearest main top at $1778.80 will reaffirm the uptrend.

A move through $1618.30 will change the main trend to down. This is highly unlikely, but due to the prolonged move up in terms of price and time, gold is inside the window of time for a closing price reversal top.

The main range is $1824.60 to $1618.30. The market is currently trading on the strong side of its retracement zone at $1745.80 to $1721.50, making it support.

The major support is the long-term 50% level at $1709.10.

Short-Term Outlook

Trader reaction to $1774.80 is likely to determine the direction of the December Comex gold futures contract early Tuesday.

A trade through $1778.40 will signal a resumption of the uptrend. A move through $1778.80 will reaffirm the uptrend. This could trigger an acceleration to the upside with $1824.60 the next major target.

Taking out $1778.40 then turning lower for the session will put December Comex gold futures in a position to form a potentially bearish closing price reversal top. This won’t change the main trend to down, but if confirmed, it could trigger the start of a 2 to 3 day counter-trend sell-off.